(03-06) 18:52 PST SAN FRANCISCO -- Safeway Inc. agreed to pay $2.25 million to settle a lawsuit alleging that it charged higher prices than advertised, misrepresented the weights of products and falsely claimed that produce from other countries was "locally grown," Bay Area prosecutors said Thursday.

Under the deal, the Bay Area's leading grocer admits no liability but is bound by a permanent injunction barring it from making false or misleading statements, charging more than the lowest posted price and failing to honor valid coupons, discounts or offers.

Pleasanton's Safeway, which had revenues of $36 billion in 2013, must also "clearly and conspicuously disclose any inclusions, exceptions or limitations to any Safeway offers, coupons or discounts," according to the settlement.

Safeway spokeswoman Teena Massingill said Thursday, "Safeway has one of the best price accuracy rates in the nation, something we are very proud of. This settlement came about because of our inconsistency in communicating and applying our scan guarantee to our customers. It is not about excessive overcharges or price accuracy issues."

Massingill added that Safeway "will take additional steps to make our scan guarantee policy more visible to our customers and well-understood by our employees."

The deal was revealed the same day that Safeway and Albertsons announced a merger of two of the nation's biggest supermarket chains, valued at more than $9 billion.

Marin County District Attorney Ed Berberian said his office "remains committed to prosecuting pricing accuracy violations and ensuring consumers pay no more for items then advertised."

The suit also said Safeway had violated a 2008 injunction requiring the store to initiate and maintain a program to minimize price discrepancies.

That injunction required the store to adopt a "price accuracy policy," giving consumers a free item if they were overcharged for the item and the lowest advertised price was $5 or less. If the product's price was more than $5, the consumers would be charged the correct price and given a $5 gift card.

Stores failed to routinely honor the requirement, however, and didn't post signs notifying customers about it, the lawsuit said.

Under the settlement, Safeway has agreed to increase the number and visibility of store signs notifying customers of the policy, train employees on how to comply with the policy, and hire a third-party auditor to conduct annual reviews of compliance.